The case primarily revolves around organizational change but it is neither an external environment prompted change nor an internal business process saturation triggered change. It is a disruption threatening DNA level mutation at all levels of the Hotel-individual, team, department, and organization.
Omkar's father respected the fact that omkar's DNA supports the generic business acumen but not specific family business of general finance and helped him pursue his interest and career. Omkar too, held his father's reputation and expectation high by displaying good business sense and values to create a profitable and sustainable business model with the help and support of his friends and family. Given the nature of industry, the business model demonstrated unparalleled shared vision, proud organizational citizenship behaviour, empowered team delivering impeccable strategic to touch point services, last mile delivery beyond the call of duty and an optimistic sustainable future anchored in informal family like work culture.
1. A dipstick SPIRE (Systematic Probing and Investigation of Related Environment) Analysis of external environment of the hotel will highlight that Tier II cities in India still favour non-tangible values to commercial values both while offering services and receiving the same. That illuminates the immaculate reputation the hotel built in a short span of two years.
Functioning and decision making style of Omkar were in sync with the socio cultural values of both the place and people, internal and external. But the decision to lease out the property without taking into confidence his team from the beginning was the brewing point of problem. A flat structure, and shared decision making culture was subordinated to aspirations of the CEO singularly, leading to DNA level mutation.
2. The case does not reflect that there was any perception gap between stakeholders. It is a clear case of discreet dissemination of information which led to complex processing of same by different stakeholders, especially Omkar's team members. They rightly perceived the changes as peripheral, superfluous and cosmetic where as the lessor company tried portraying the new arrangement as central to growth and expansion. There was an obvious shift of focus and locus in the new 'lease' arrangement that was perceived and comprehended by each of the shareholders clearly although with different rationale and acceptance.
3. The Heads of the Departments of the Hotel on boarded and continued in the hotel for common reasons like-being known to Omkar and family, empowerment and authority, personal care and recognition by Omkar, strong team dynamics, mutual functional appreciation, ownership and pride. Seasoned professionals like Preetam have their priorities and life goals sorted and show courage of conviction to put up the papers when their personal and professional vision fall out of alignment with organizational vision and mission. If they could leave their native places to join a friend for right reasons they would be wise to leave the present setup too, again for right reasons. The reaction was not only emotional; it was also rational and logical. Some of the questions raised in the meetings like 'whether there would be an equitable upgrade in service offer if premium is charged for the brand equity' 'whether the expenses like salary be booked by the lessor as they would claim royalty for their brand' and about 'creating competition and earning from both competitors' goes on to vouch for the wise business sense and farsighted vision of the leadership team.
4. As an advisor to Omkar, the first suggestion would be to all together reconsider the decision of leasing out for following reasons.
a) As per information given in the case, it has been only a few years that the hotel has been put up for business. All businesses start with a vision, mission, long term and short term objectives and the change, especially of the magnitude being contemplated here is too soon.
b) The change being contemplated is of DNA level that will mutate and disrupt a successful business model irrevocably and incorrigibly.
c) The leasing out is pre mature and could be put on hold for few more years (at least half a decade).
d) A due diligence of the lessor's brand, lease model and past, needs to be undertaken with the team members of Omkar's hotel before deciding a leasing strategy.
e) As of now the cues indicate that the lessor is imposing its terms and conditions in addition to their brand arrogance and Omkar's hotel is obligated and awed by the bigger brand. An equanimity negotiation of terms for mutual benefit needs to be worked out before committing to any arrangement.
f) Thorough organization change and development practices need to be followed in toto before initiating change.
g) Respect for employee sentiment, satisfaction and shared decision making is a minimum before Omkar decides for leasing at all.
Alternatively, if Omkar has made up his mind irreversibly about leasing out, he should resort to clear communication with his team highlighting rationale, benefits, gains, losses, terms of reference of lease, roles, authority and accountability of each team member and future plans for the Hotel. Reinstating the confidence in his team, bringing them together, deliberating with them, and incorporating their suggestions, requesting them to stay by articulating shared vision is minimal non-negotiable must, to ensure arresting the dwindling confidence, spirit and disintegrating team.
The franchise and leasing model is not new to Indian Hotel industry and the budget segment hotels, especially in tier II and III cities have seen evidence of such arrangements both with favourable and with adverse outcomes. Much depends on further analysis of external environment and customer expectation and demands. If the city is undergoing socio demographic and professional transitions like attracting big corporates with their manufacturing and business units, may be sooner or later Omkar's hotel has to turn around from a family business model to a more commercial and corporate business model. The leadership team can get together to perform an analysis of service canvas contemporary to demands of the day and rethink their model with umpteen options of which the present leasing could also be one. The bottom line still is… IT is Too Much… Too Rapid… without enough homework and due diligence.
Tanjul Saxena, Consultant, META AIDE, Jaipur